In episodes of liquidity stress, capital account and exchange rate management seem to override the domestic monetary policy objectives of growth-inflation considerations, Reserve Bank of India (RBI) executive director Deepak Mohanty said yesterday in New Delhi.

Prior to the financial crisis, financing India's current account deficit was "not an issue", Mohanty noted, as capital inflows "resulted in both the appreciation of the rupee and accretion to foreign exchange reserves".

However, as global